9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (1) TMI 1906 - SC - Indian LawsMaintainability of suit - suit for recovery of mere interest under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 - contract for supply of goods between the parties was entered into prior to enforcement of the Act, i.e. on 23.09.1992 - maintainability of suit if no reservation is made by the supplier retaining to it the right to recovery interest under the Act when the payment(s) of the principal sum is/are accepted, though these may be made beyond the prescribed period. Whether Act, 1993 is not applicable when the contract for supply was entered between the parties prior to enforcement of the Act i.e. 23.09.1992? - HELD THAT - The Act, 1993 being beneficial legislation enacted to protect small scale industries and statutorily ensure by mandatory provision for payment of interest on the outstanding money, accepting the interpretation as put by learned Counsel for the Board that the day of agreement has to be subsequent to the enforcement of the Act, the entire beneficial protection of the Act shall be defeated. The existence of statutory liability depends on the statutory factors as enumerated in Section 3 and Section 4 of the Act, 1993. Factor for liability to make payment Under Section 3 being the supplier supplies any goods or renders services to the buyer, the liability of buyer cannot be denied on the ground that agreement entered between the parties for supply was prior to Act, 1993. To hold that liability of buyer for payment shall arise only when agreement for supply was entered subsequent to enforcement of the Act, it shall be adding words to Section 3 which is not permissible under principles of statutory construction - even if agreement of sale is entered prior to enforcement of the Act, liability to make payment Under Section 3 and liability to make payment of interest Under Section 4 shall arise if supplies are made subsequent to the enforcement of the Act. Whether in the event it is found that Act is applicable also with regard to contract entered prior to Act, 1993 in pursuance of which contract, supplies were made after the enforcement of Act, 1993, the Act, 1993 can be said to have retrospective operation? - HELD THAT - Retroactivity in the context of the statute consists application of new Rule of law to an Act or transaction which has been completed before the Rule was promulgated - In the present case the liability of buyer to make payment and day from which payment and interest become payable Under Section 3 and 4 does not relate on any event which took place prior to Act, 1993, it is not even necessary for us to say that Act, 1993 is retroactive in operation. The Act, 1993 is clearly prospective in operation and it is not necessary to term it as retroactive in operation. We, thus, do not subscribe to the opinion dated 31.08.2016 of one of the Hon'ble Judges holding that the Act, 1993 as retroactive. Whether money suit by M/s. Shanti Conductors was barred by limitation? - HELD THAT - The Limitation Act, 1963 is fully applicable with regard to money suit filed by the Appellant hence, the question of limitation has to be answered as per Limitation Act 1963 - Article 113 provides for time from which period begins as when the right to sue accrues . 1993 Act Section 4 creates statutory liability to pay interest from the day as mentioned in Section 4 the liability to pay is fastened on buyer. The amount become due as soon as liability to pay arises. Section 6 also uses the word amount due from buyer . The amount due is amount which is liable to be paid by buyer Under Section 4. Thus the fact that last payment was made on 05.03.1994 cannot be treated as period for beginning of the limitation and on that ground it cannot be held that suit was within time - the benefit of the Section 14 cannot be claimed by the Plaintiff in the facts of the present case. It is thus concluded that suit filed by the Plaintiff being Money Suit No. 21 of 1997 was barred by time. Whether judgment of this Court in Purbanchal Cables 2013 (3) TMI 518 - SUPREME COURT by which appeal of M/s. Shanti Conductors was also dismissed is binding between the parties i.e. M/s. Shanti Conductors and Assam Electricity Board and the Appellant cannot be allowed to question the said judgment in these appeals? - HELD THAT - Having held that Money Suit filed by the Appellant was barred by time, it is not necessary to express any opinion on this issue. Whether the suit filed by the Appellants for recovery of only interest when admittedly entire principal amount was paid prior to filing of the suit can be said to be maintainable? - HELD THAT - The interpretation put by learned Counsel for the Board is that proceeding for recovery of interest can be undertaken only when any amount is due. He submits that amount due used in Section 6 is Principal amount. In event we accept the interpretation put by counsel for the Board, then buyer will very easily get away from payment of interest only after making payment of Principal amount. This interpretation shall defeat very purposes of 1993 Act. It is well settled that provisions of Act has to be interpreted in the manner so as to advance the object of the Act - the suit by supplier for recovery of only interest is maintainable. Whether appeal filed by M/s. Trusses and Towers Pvt. Ltd. challenging the review judgment dated 19.03.2003 cannot be entertained since no liberty was granted by this Court in SLP(C) No. 12217 of 2001 2001 (8) TMI 1435 - SC ORDER when the SLP filed against the main judgment of the High court dated 05.04.2001 was dismissed as withdrawn? - HELD THAT - The Division Bench judgment does not indicate that it proceeds on the ground as contended by the Appellant and noticed by this Court on 06.08.2001. The interest of 9% was allowed on the premise that 1993 Act is not applicable and said interest is allowed on equity relying on an earlier judgment on this Court in Assam Small Scale Industry Development Corporation and Ors. v. J.D. Pharmaceuticals and O 2005 (10) TMI 494 - SUPREME COURT - thus the present appeal challenging the review judgment cannot be entertained. The ground on which the Appellant can challenge the review judgment can be the ground on which liberty was obtained to file review. We thus hold that Civil Appeal No. 8445 of 2016 is not maintainable. Whether the High court while considering the Review petition No. 75 of 2001 M/s. Trusses Towers Pvt. Ltd. even after expressing that Act, 1993 is not applicable could have allowed 9% interest to the Plaintiff? - HELD THAT - High Court did not commit any error in awarding 9% interest to Plaintiff Respondent. There are no error in the judgment allowing partly the review application filed by the Plaintiff. Appeal dismissed.
Issues Involved:
1. Applicability of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 to contracts entered prior to its enforcement. 2. Retrospective or retroactive nature of the Act. 3. Limitation period for filing suits under the Act. 4. Binding nature of prior judgments. 5. Maintainability of suits filed solely for interest. 6. Maintainability of appeals following withdrawal of earlier petitions. 7. Authority of the High Court to award interest even if the Act is deemed inapplicable. Detailed Analysis: Issue 1: Applicability of the Act to Pre-Act Contracts The Supreme Court examined whether the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (the "Act") applies to contracts entered into before the Act's enforcement on 23.09.1992. The Court noted that the statutory liability under Sections 3 and 4 of the Act arises from the supply of goods or services and the subsequent failure to make timely payments. The Court held that the date of the agreement is irrelevant if the supply occurs after the Act’s enforcement. The judgment in Purbanchal Cables and Conductors Pvt. Ltd. and other similar cases, which held that the Act applies only to post-enactment agreements, was found to be incorrect. The Court concluded that the Act is applicable to supplies made after its enforcement, regardless of when the agreement was entered. Issue 2: Retrospective or Retroactive Nature of the Act The Court clarified that the Act is prospective and not retrospective. It emphasized that the Act applies to transactions occurring after its enforcement date. The opinion of Justice Gowda, which suggested that the Act is retroactive, was not endorsed. The Court stated that the Act does not affect past transactions but applies to supplies and payments due after its commencement. Issue 3: Limitation Period for Filing Suits The Court addressed whether the suit filed by M/s. Shanti Conductors was barred by limitation. It was determined that the Trial Court erroneously held that Section 10 of the Act, which provides overriding effect, negated the applicability of the Limitation Act. The Supreme Court clarified that the Limitation Act, 1963, is applicable, and the limitation period for filing suits under the Act is governed by Article 113, which prescribes a three-year period from when the right to sue accrues. Since the last supply was made on 04.10.1993 and the suit was filed on 10.01.1997, it was held to be barred by limitation. Issue 4: Binding Nature of Prior Judgments Given the finding that the suit was barred by limitation, the Court did not find it necessary to address the binding nature of the judgment in Purbanchal Cables and Conductors Pvt. Ltd., which had dismissed the appeal of M/s. Shanti Conductors. Issue 5: Maintainability of Suits Filed Solely for Interest The Court upheld the maintainability of suits filed solely for the recovery of interest. It referred to the decision in Purbanchal Cables, which approved the view that a suit for interest alone is maintainable under Section 6 of the Act. Issue 6: Maintainability of Appeals Following Withdrawal of Earlier Petitions The Court examined whether the appeal by M/s. Trusses and Towers Pvt. Ltd. was maintainable after the withdrawal of an earlier Special Leave Petition (SLP). It was noted that the review petition was partly allowed by the High Court, awarding 9% interest. The Supreme Court held that the appeal challenging the review judgment was not maintainable, as it did not align with the grounds on which the review was permitted. Issue 7: Authority of the High Court to Award Interest The High Court awarded 9% interest on the delayed payments, even while holding that the Act was not applicable. The Supreme Court found no error in this decision, referencing the precedent set in Assam Small Scale Industry Development Corporation Ltd. v. J.D. Pharmaceuticals, which allowed for interest on transactions made prior to the Act’s enforcement. Conclusion: The Supreme Court dismissed all the appeals, affirming the judgments of the lower courts where applicable and clarifying the interpretation and application of the Act.
|
